Apple injunction defeats, and now under anti-trust cloud

It's why I hide his posts. I believe the argument is that Apple distorted the market with their anticompetitive behavior, were that what the DoJ's evidence to show. Having distorted the market with the MFN clause and agency model, Amazon was forced to renegotiate or lose their contracts, ie play ball or go home. A retailer is nothing without content.

Unless someone can show that Amazon had negotiated these terms before Apple, in which case Apple can be said to be trying to get the same deal as Amazon, but I don't think that's what happened.

Did Apple distort the market in order to deliberately bring about higher prices, or was Amazon using monopoly power in the ebook market to suppress prices, a strategy which was no longer viable once there was another credible competitor?

Irrelevant. Apple distorting the market is the side effect; the cause is their alleged collusion to unify the publishers against Amazon to their, and the publisher's, benefit.

If that is what happened then the DoJ can argue Apple was being anticompetitive.

This is why things like standards bodies exist; had Apple worked with the publishers to create a new book standard with features like lending, reselling, borrowing, cross platform availability (WP, Android, iOS, Windows, Mac, the Web, etc) and with an open publisher tool then Apple likely could have slipped in their agency+mfn clause as a matter of course.

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My argument has always been that the latter is the simplest explanation that accounts for the outcomes we've seen and that is compatible with a plausible understanding of Apple's motives. Nothing the DoJ has presented so far has given me cause to reconsider this.

It doesn't matter that Apple's goal was the latter, colluding with the publishers to accomplish it is arguably illegal since you are intentionally manipulating the marketplace, and actually raising prices in the process.

Apple didn't distort the market, Amazon did. Amazons model was not in anyone's interest long term, given time they would have been at the center of a DOJ investigation but it would have put a bunch of publishers out of business first.

Amazon wants them out of business. Apple doesn't care, they prefer to be the middle man. Amazons model meant the publishers were losing money when Amazon did their special pricing. It wasn't just Amazons loss.

Irrelevant. Apple distorting the market is the side effect; the cause is their alleged collusion to unify the publishers against Amazon to their, and the publisher's, benefit.

If that is what happened then the DoJ can argue Apple was being anticompetitive.

OK, but my point is, the notion that something like this happened is not discernible from any of the general facts about what occurred — the fact that publishers agreed to agency deals, the fact that Apple wanted an MFN clause, the fact that publishers were able to extract concessions out of Amazon after Apple's entry into the market, etc. There is a narrative that explains all of this without invoking collusion.

By way of analogy, this isn't like prosecuting a guy for murder when you've got a victim with a knife in his chest. This is like prosecuting a guy for murder when you've got a victim who died of, say, heart failure, on the basis that a) the guy is dead, and b) your suspect is the only person who had access to him. Now, if you've got a receipt showing that your suspect bought an undetectable poison that causes heart failure, maybe you've got a pretty good case. But so far the DoJ hasn't presented something like that, as far as I can see.

It's why I hide his posts. I believe the argument is that Apple distorted the market with their anticompetitive behavior, were that what the DoJ's evidence to show. Having distorted the market with the MFN clause and agency model, Amazon was forced to renegotiate or lose their contracts, ie play ball or go home. A retailer is nothing without content.

That's the whole point wasn't it OC? Or would you have us believe that there was *plenty* of competition in that particular market? Very sad to say that what OrangeCream seems to conveniently leave out of the argument is that prices (any prices) can go up all the time (and for whatever reason), and it doesn't necessarily mean that there was some sort of *collusion*. Did consumers still have competitive prices? Forget about whether or not they were *cheap* or *low*. Now *THATS* a distortion as OC likes to say; especially if artificially imposed.

No, cointrary to what people seem to believe, it is most certainly *not* the DoJs job to ensure that consumers have "low prices" only to ensure that the prices remain competitive. Do you disagree with that OC? Oh wait, you hide my posts

Did Apple distort the market in order to deliberately bring about higher prices, or was Amazon using monopoly power in the ebook market to suppress prices, a strategy which was no longer viable once there was another credible competitor?

Did Apple distort the market in order to deliberately bring about higher prices, or was Amazon using monopoly power in the ebook market to suppress prices, a strategy which was no longer viable once there was another credible competitor?

Bingo! *That's* market distortion/manipulation.

What is the point of this continued harping on Amazon and its actions?

Even if Amazon is found to have done such a thing at some point in the future, it wouldn't excuse Apple, if found guilty, of collusion and price fixing. If Apple and others had problems with Amazon's approach, they needed to take their issues up the ladder - not into their own hands by allegedly attempting to collude and price fix (at the detriment to the consumer, no less).

If someone steals your lunch money, and you get three friends and jump him in the parking lot after class - you're still going to be charged with assault and battery no matter how much you complain to the cops about what the other guy did.

And that's exactly what you and ZnU are doing here. You're arguing that Apple was in the right to break laws because someone else was doing something wrong.

How you can't see this or why you think it's acceptable continues to confound me, with the only explanation that makes sense being pure and simple defensiveness that Apple could possibly be doing something wrong.

Apple didn't distort the market, Amazon did. Amazons model was not in anyone's interest long term, given time they would have been at the center of a DOJ investigation but it would have put a bunch of publishers out of business first.

Amazon wants them out of business. Apple doesn't care, they prefer to be the middle man. Amazons model meant the publishers were losing money when Amazon did their special pricing. It wasn't just Amazons loss.

Apple didn't distort the market, Amazon did. Amazons model was not in anyone's interest long term, given time they would have been at the center of a DOJ investigation but it would have put a bunch of publishers out of business first.

Amazon wants them out of business. Apple doesn't care, they prefer to be the middle man. Amazons model meant the publishers were losing money when Amazon did their special pricing. It wasn't just Amazons loss.

Apple didn't distort the market, Amazon did. Amazons model was not in anyone's interest long term, given time they would have been at the center of a DOJ investigation but it would have put a bunch of publishers out of business first.

Amazon wants them out of business. Apple doesn't care, they prefer to be the middle man. Amazons model meant the publishers were losing money when Amazon did their special pricing. It wasn't just Amazons loss.

Perhaps I'm behind on what is going on here, so please correct me where I'm wrong.

Amazon buys from Publishers, at say $10 per book. Publisher wants list price to be $15 for said book.Amazon pays Publisher $10, then sells it for $5 as a special price. Loss leader pricing, which they probably make up on customers buying other books or Amazon sold goods.Publisher is still paid the $10 whether Amazon sells it for $5 or $20.

So how does that put the Publisher out of business? They agreed on a price for the goods sold and were paid. Or are you arguing that the "perceived value" of said book is now diminished?

What is the point of this continued harping on Amazon and its actions?

One question someone might have, upon hearing a simple account of the events that occurred here, is "How could the entry of a new competitor into a market cause prices to rise in the absence of collusion or some other anticompetitive action?"

Amazon's actions are relevant because they provide an answer to this question — Amazon was using monopoly power in the ebook distribution market to suppress prices. Apple's entry broke their monopoly.

How you can't see this or why you think it's acceptable continues to confound me, with the only explanation that makes sense being pure and simple defensiveness that Apple could possibly be doing something wrong.

My argument is not that collusion was acceptable, my argument is that the existence of collusion has not been directly demonstrated, there is a straightforward account of how observed market outcomes could have arisen without it, and the ends to which Apple is supposed to have colluded are not even obviously in Apple's interests.

What is the point of this continued harping on Amazon and its actions?

One question someone might have, upon hearing a simple account of the events that occurred here, is "How could the entry of a new competitor into a market cause prices to rise in the absence of collusion or some other anticompetitive action?"

Amazon's actions are relevant because they provide an answer to this question — Amazon was using monopoly power in the ebook distribution market to suppress prices. Apple's entry broke their monopoly.

For one, there is no such thing as "Apple's entry". There's "Apple's collaboration with a slew of publishers to enter the market and force the costs higher and onto the end user".

For two, and once again, in this case - that question has no place. The evidence at hand clearly shows Apple conspiring with book publishers to change the way things work now to raise prices on e-books so both Apple (with its 30% cut) and the publishers (by raising costs to consumers) can make more money.

How you can't see this or why you think it's acceptable continues to confound me, with the only explanation that makes sense being pure and simple defensiveness that Apple could possibly be doing something wrong.

My argument is not that collusion was acceptable

But it sure looks like collusion happened. The others have settled, and Apple is now in front of the judge with evidence against it that it went down exactly as collusion and price fixing.

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my argument is that the existence of collusion has not been directly demonstrated

Can you explain this to me? We've got e-mails, Jobs' own words, etc. How could you possibly say this, unless attempting to split hairs on an infinitely fine level.

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there is a straightforward account of how observed market outcomes could have arisen without it, and the ends to which Apple is supposed to have colluded are not even obviously in Apple's interests.

An ebook store with a 30% cut isn't in Apple's interests?

I'm even more baffled after you posted this commentary. What makes you think that these arguments hold any kind of weight whatsoever?

For two, and once again, in this case - that question has no place. The evidence at hand clearly shows Apple conspiring with book publishers to change the way things work now to raise prices on e-books so both Apple (with its 30% cut) and the publishers (by raising costs to consumers) can make more money.

Many intelligent observers simply do not agree with your assessment that the evidence presented to far points obviously and unambiguously to impermissible collusion. If you want to advance that position, you need to present the evidence and explain why it means what you claim it does, not simply make assertions like the above.

@ZnU, clearly Apple will argue that no collusion occurred and present it's best evidence while the DoJ will do the same except to show collusion.

The point isn't that Amazon is a get out of jail card, because they aren't, it's that neither side has presented evidence to show either conclusion is true. Until either does we are left to argue whether Apple is guilty or not, but unless one of us is an Apple executive or has access to their emails, there is in fact a reasonable possibility that they are guilty.

Perhaps I'm behind on what is going on here, so please correct me where I'm wrong.

Amazon buys from Publishers, at say $10 per book. Publisher wants list price to be $15 for said book.Amazon pays Publisher $10, then sells it for $5 as a special price. Loss leader pricing, which they probably make up on customers buying other books or Amazon sold goods.Publisher is still paid the $10 whether Amazon sells it for $5 or $20.

So how does that put the Publisher out of business? They agreed on a price for the goods sold and were paid. Or are you arguing that the "perceived value" of said book is now diminished?

If Amazon sells ebooks for $10 and printed books for $15, then let's say that 10 people buy the ebook and 10 the printed book. Let's say for simplicity that Amazon gives all the money to the publisher. The publisher makes:10*10=100 from ebooks10*15=150 from printed booksThe total is $250.

Now if Amazon sells ebooks for $5 but still gives $10 to the publisher, 5 more people will buy the ebook because the price difference between ebook and printed one is bigger. Now the publisher makes:15*10=150 from ebooks5*15=75 from printed booksThe total is $225 and the publisher lost $25.

For two, and once again, in this case - that question has no place. The evidence at hand clearly shows Apple conspiring with book publishers to change the way things work now to raise prices on e-books so both Apple (with its 30% cut) and the publishers (by raising costs to consumers) can make more money.

Many intelligent observers

If you're going to attack my argument with "present the evidence et al", then don't be vague and sloppy with me, either.

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simply do not agree with your assessment that the evidence presented to far points obviously and unambiguously to impermissible collusion. If you want to advance that position, you need to present the evidence and explain why it means what you claim it does, not simply make assertions like the above.

OK, I'll retract the "to make more money" portion of that.

The point, that you keep dodging, is - if Apple and the book publishers have a problem with Amazon being a monopoly, they all went about changing that in the entire wrong-ass way.

We'll find out whether it was actually illegal or not soon enough, but clearly there are other ways to go about this than the way it did - which has the DOJ and it's perfect batting record barking up tree and breathing down necks at the same time.

*Thats* what you basing it on? Because "others settled"? Has it occurred to you that perhaps they didnt want to incur the expense of such a case? People make choices all the time based on cost; especially businesses.

You missed the mark. No one "gave" the market to anyone. There was no free lunch here. When it got down to it, what other choice existed that could possibly (and successfully) spur user interest in ePrint, improve demand for it, and possibly grow a market centered on it, besides making a deal Amazon? Any prior attempts were failing to gain traction. I highly doubt the publishers sat back and said: "Okay, we'll let Amazon handle things from here on in." Quite the contrary. I'm sure their hope was that as the market matured, and new entrants followed, their choices and options for doing business would increase. They didn't seem to comprehend that they (metaphorically speaking) signed a contract with the devil.

Apple clearly set up deals with all these companies to combat Amazon's model, and Steve Jobs is on record with what he said to them.

What we know is that Apple, as a newcomer to the market without Amazon's market power, offered publishers a better deal than Amazon was offering them.

I think people who are certain collusion occurred here should be asking themselves how these negotiations would have looked different had collusion not occurred. For instance, would Apple not have offered agency deals? Since Apple chose an agency model for the App Store, where they had essentially complete freedom to adopt whatever model they wanted, that seems unlikely. Would Apple not have negotiated for an MFN clause? An MFN clause would have been in Apple's interests regardless, so that also seems unlikely. Would Apple negotiators not have pointed out to publishers that they'd make more money with Apple's proposed terms? That seems like an entirely natural thing to point out.

What evidence has been presented that uniquely supports collusion, i.e. that that cannot be explained if collusion did not occur? I admit I have not read every single document related to the case, but I am aware of none.

The point, that you keep dodging, is - if Apple and the book publishers have a problem with Amazon being a monopoly, they all went about changing that in the entire wrong-ass way.

That point is entirely irrelevant to my argument. Once again, my position is not "Amazon had a monopoly, therefore collusion on Apple's part was justified." It's "Because Amazon was apparently using its monopoly power in the ebook distribution market to suppress prices, the fact that prices rose following Apple's entry into the market (i.e. Apple breaking Amazon's monopoly) is not prima facie evidence of collusion involving Apple."

The point isn't that Amazon is a get out of jail card, because they aren't, it's that neither side has presented evidence to show either conclusion is true.

The burden here, of course, is on the DoJ — Apple can't prove that collusion didn't happen, it can merely point to things inconsistent with collusion and explain how observable outcomes could have been produced without it. Which Apple has done a pretty good job of, as far as I can tell.

But from the moment that Turvey sat down in the witness chair, Snyder began to attack his story. Turvey told the court that in early 2010, representatives of the five accused publishers, all of which have settled with the government, told him directly that they were switching to the agency model because contracts they entered into with Apple required it. But under oath, Turvey acknowledged that his lawyer helped him draft the statement that he filed with the court and that he was unsure whether he or his lawyer wrote important passages. "You can't tell the court whether you wrote it or not," Snyder told him multiple times.

Things went downhill from there. Under Snyder's questioning, Turvey acknowledged that he couldn't remember a single name of any of the publishing executives who had told him Apple was the reason the publishers were switching their business model. He conceded that the publisher's move to the agency system was important to Google's own fledgling book business, yet Turvey couldn't remember any details about the conversations with publishers. By the end of the interview Turvey had gone from saying the publishers had told him directly, to saying they had merely told people on his team, to finally saying the publishers had "likely" told someone on his team.

*Thats* what you basing it on? Because "others settled"? Has it occurred to you that perhaps they didnt want to incur the expense of such a case? People make choices all the time based on cost; especially businesses.

If you're going to pick one four-word sentence out of the entire post I made and claim "that's what you're basing it on?"

How am I supposed to take you seriously? Do you not see the insanity of such a comment?

Of course that's not what I'm basing my entire argument on. If you read the whole thing, you'd see that pretty clearly.

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So where's the evidence the DoJ supposedly has?

I would presume in a set of folders and binders and such with the legal team that has decided going to trial on this is the proper way to go.

Some of the evidence (whether damning or only part of a larger set) is clear for all of us to see, and it has been presented and discussed ad nauseum in this space and many others.

Apple clearly set up deals with all these companies to combat Amazon's model, and Steve Jobs is on record with what he said to them.

What we know is that Apple, as a newcomer to the market without Amazon's market power, offered publishers a better deal than Amazon was offering them.

That it is to the detriment of consumers and that Jobs told them straight up to pass the extra costs onto the public because that's what you want anyway isn't relevant to this situation? If it was this simple, it'd be hard to think that the DOJ would go where it's going, no?

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I think people who are certain collusion occurred here should be asking themselves how these negotiations would have looked different had collusion not occurred. For instance, would Apple not have offered agency deals? Since Apple chose an agency model for the App Store, where they had essentially complete freedom to adopt whatever model they wanted, that seems unlikely. Would Apple not have negotiated for an MFN clause? An MFN clause would have been in Apple's interests regardless, so that also seems unlikely. Would Apple negotiators not have pointed out to publishers that they'd make more money with Apple's proposed terms? That seems like an entirely natural thing to point out.

I agree that people who are certain collusion occurred should keep an open mind. I'm leaning toward Apple being in the wrong for reasons I've presented - but I'm totally open to listening to each side during this trial and coming to conclusions that make sense based on more information revealed.

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What evidence has been presented that uniquely supports collusion, i.e. that that cannot be explained if collusion did not occur? I admit I have not read every single document related to the case, but I am aware of none.

I haven't dug that deep myself, but clearly we don't have every bit of information with which to dig, either.

Lots of very informative stuff that outlines a significant portion of the claims against Apple and the publishers.

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That point is entirely irrelevant to my argument. Once again, my position is not "Amazon had a monopoly, therefore collusion on Apple's part was justified." It's "Because Amazon was apparently using its monopoly power in the ebook distribution market to suppress prices, the fact that prices rose following Apple's entry into the market (i.e. Apple breaking Amazon's monopoly) is not prima facie evidence of collusion involving Apple."

I agree with your statement. But I don't think anyone's making that claim. At least, I'm certainly not, and neither is the DOJ.

Further, Amazon hasn't been found to have done anything wrong, so why would we assume "Amazon was apparently using its monopoly power"?

Lots of very informative stuff that outlines a significant portion of the claims against Apple and the publishers.

Nothing here changes my understanding that DoJ's case is effectively that the combination of offering the agency model and requiring MFN, in conjunction with some straightforward statements about how this model will benefit publishers, constitutes illegal collusion. Now, I'm not a lawyer, but this seems like a huge reach to me, especially given that Apple favors the agency model with content providers in general and that Apple had a clear business interest in an MFN clause regardless of any alleged collusion.

What doesn't help that there are some more direct hints of collusion directly between publishers. It's not hard to imagine some guilt-by-association reasoning in a decision here.

Further, Amazon hasn't been found to have done anything wrong, so why would we assume "Amazon was apparently using its monopoly power"?

We're not "assuming" it. We're looking at the facts. In order to determine why prices rose after Apple's entry into the ebook market, you need to understand the state of the ebook market before Apple entered it, and the state after Apple entered it. The DoJ is being extremely disingenuous, IMO, by presenting a case that treats the pre-Apple state of this market as a competitive, undistorted state.

Apple didn't distort the market, Amazon did. Amazons model was not in anyone's interest long term, given time they would have been at the center of a DOJ investigation but it would have put a bunch of publishers out of business first.

Amazon wants them out of business. Apple doesn't care, they prefer to be the middle man. Amazons model meant the publishers were losing money when Amazon did their special pricing. It wasn't just Amazons loss.

Perhaps I'm behind on what is going on here, so please correct me where I'm wrong.

Amazon buys from Publishers, at say $10 per book. Publisher wants list price to be $15 for said book.Amazon pays Publisher $10, then sells it for $5 as a special price. Loss leader pricing, which they probably make up on customers buying other books or Amazon sold goods.Publisher is still paid the $10 whether Amazon sells it for $5 or $20.

So how does that put the Publisher out of business? They agreed on a price for the goods sold and were paid. Or are you arguing that the "perceived value" of said book is now diminished?

Amazon used a much more complex model where the price they pay the publishers was dependant on the price that Amazon sold the book for. For sake of discussion/simplification you can assume it was a percentage of the sales price.

Publisher sells the Ebook via various channels at $10; Amazon does a "special promo pricing" on 10-20% of your books. Instead of selling those books at the market price of $10 amazon sets it's own price substantially lower, pays the publishers a smaller overall price (but similar percentage). The problem is, Amazon was doing it, not to promote books that weren't selling, but repeatedly doing it with books that were selling well. The better it sold the more likely it had promotional pricing rules attached. Your most successful product has a significantly lower profitability than your mid-tier products. Your profitability plummets.

Do I like the net effect the Apple / Agency model had on pricing? No. But I believe it created an opportunity for the buyers/customers to actually have more influence over the price that the statistical modelling Amazon was doing to drastically up their profitability at the expense of everyone around them. Amazon has near-perfect real time data on purchasing habits, they utilize it significantly more than most people realize and have done so several times in the past in some very disturbing ways. (Your immediate neighbour is presented with a difference price than you because their data indicates you earn more money).

As I understand the term, it's just a short term promotion. The long term effect on the market is, accordingly, limited.

Moreover, the publishers remain free to not participate. This creates the same problem as not selling to Walmart, but businesses have, in fact, decided to turn down Walmart's volume if it hurts the bottom line overall.

What I don't see here is anything anti-consumer. What I see is price cutting.

Moreover, we all know that, overall, Amazon isn't hugely profitable. So, it's going to be hard to make the case that Amazon is padding its own profits, because whatever it does, the overall effect of its business model is to squeeze profits all around. Including its own.

The P/E of Amazon is in the stratosphere precisely because its business model puts a squeeze on profits.

On any legal theory I know, price cutting, as a thing in itself, considered both legal and good for consumers.

The only bit that is illegal is when you start rigging the market to make yourself extra money. By, say, colluding with the players to make sure the consumer pays extra costs in some scheme or other. Is Amazon doing that? How?

I'd like to see how Amazon is actually doing that, because AFAICT, it's doing a bad job of it.

Indeed, a lot of the argument I read in here is that big, bad Amazon is taking out too much of the profit. Well, I've heard that before and, inevitably, people making that argument are not really interested in the consumers (except to tell them how they must spend more because it's healthier for the market).

I'm very suspicious of such arguments; they usually are a justification for price fixing. They usually are attached to arguments for "fair trade" laws, which did not benefit the consumer and for things like having government license and limit things like the number of taxis to "prevent cut-throat competition" which, again, did not notably benefit the consumer and even prevent certain kind of businesses from arising.

Here is something for you guys to chew on. The person does a good job explaining exactly *why* the DoJ is likely to lose the case. Also makes note that it's a rule of reason case rather than a per se case.

Here is something for you guys to chew on. The person does a good job explaining exactly *why* the DoJ is likely to lose the case. Also makes note that it's a rule of reason case rather than a per se case.

Here is something for you guys to chew on. The person does a good job explaining exactly *why* the DoJ is likely to lose the case. Also makes note that it's a rule of reason case rather than a per se case.

This article makes essentially every point I've made on this subject, better than I have, and a few others besides. I guess that saves me some work; I can just post links to it whenever this subject comes up.

The response though is what will hang Apple. While a MFN clause and the Agency Model may be a valid business models, the publishers, as competitors, with Apple as co-conspirator, are not allowed to agree to use the same model in concert. The article is sloppy legally. It's a clear conspiracy in restraint of trade, as well as the use of an illegal cartel to wield monopoly power.

Even a second year law student knows this stuff.

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Professor Manne says “Moreover, it isn’t clear to me (maybe I’m missing some obvious controlling case law?) that agreement over the type of contract used amounts to an illegal horizontal agreement.” What Professor Manne is missing is the old, but still valid, Paramount Famous Lasky case (S. Ct. 1930). In that case the Court held that an agreement among film distributors to require their customers to agree to an arbitration clause in their contracts, violated Section 1 of the Sherman Act.

Whether the publisher or retailer is allowed to set the price of an e-book is not just a “business model,” it is a term of trade in a contract. Competitors should be no more free to agree jointly on that term of trade in their contract than they should be to agree jointly on their price term. Perhaps the agency model is superior. Certainly e-book retailer Apple seemed to think so, and it might well have been perfectly proper for each of the publishers to have agreed with Apple to enter into that arrangement (especially after Leegin). What is not proper is for the competing publishers to use their joint bargaining power to obtain a term of trade they could not otherwise obtain individually from customers, viz Amazon.

The response though is what will hang Apple. While a MFN clause and the Agency Model may be a valid business models, the publishers, as competitors, with Apple as co-conspirator, are not allowed to agree to use the same model in concert. The article is sloppy legally. It's a clear conspiracy in restraint of trade, as well as the use of an illegal cartel to wield monopoly power.

The parties analogous to the film distributors in the cited case are the publishers, not Apple. Unless the DoJ can show that Apple facilitated collusion between publishers to force Amazon onto the agency model, that Paramount case appears irrelevant with respect to Apple.

The DoJ seems to be arguing, in effect, that the terms of Apple's contracts with publishers facilitated such collusion. But given that Apple was bargaining for a bunch of contract terms that, as the article correctly points out, had "valid purposes outside the realm of price-fixing" this seems like a big stretch. Especially since the terms of Apple's contracts with publishers in no way directly required publishers to demand agency agreements from other ebook distributors.

Apple was the middleman and part of the conspiracy. They also benefited. As a member of a conspiracy they are jointly liable for the behavior of all members. They knowingly acted in restraint of trade. It's a fundamental legal principal. And that is first year level stuff. There is also evidence that price fixing was the REASON for the agreements, hence the MFN portion of the agreement, and emails to the effect that this would shore up prices and prevent discounting.

Unless the DoJ can show that Apple facilitated collusion between publishers to force Amazon onto the agency model, that Paramount case appears irrelevant with respect to Apple.

Did you read the DoJ slideshow?

If anything, Apple was the one driving the move to the new model.

Apple was facilitating conversations between the principals and everyone was talking about how to move off of the 9.99 price that they all hated.

To be sure, they weren't total fools about it, but there's at least a prima facia case here for collusion. Just enough of the conspiracy made it to the record.

It was certainly made clear that they couldn't do this deal one at a time. They needed to know the others were coming along. And, the record we have shows they were willing to make this clear in the occasional e-mail. Not to mention that damning comment Jobs made that no one would be able to undercut the new, higher price. How is that possible in a free market? What holds up a price?

If the deal couldn't happen without a joint agreement, then it's collusion and it doesn't matter if it was otherwise legal. If the collusion was needed to get off of the 9.99 price, then it's restraint of trade of just the sort the law should call out.

And, you can bet that part of the settlement agreement was that some of Apple's former partners are going to testify about what didn't make it to the paper trail. You don't think the Government didn't find out the substance of some of those phone calls before filing?

We'll see how it plays out in court. Apple will have wonderful legal representation and, I'm sure, defenses that we haven't seen. The slideshow is, of course, but one side of the story. And even some of the stuff in the slideshow isn't wholly damning.

But, this isn't some wishful thinking by some backbencher in the DoJ somewhere. There's something here that Apple needs to explain to a judge.

Apple was facilitating conversations between the principals and everyone was talking about how to move off of the 9.99 price that they all hated.

Apple, as a new entrant into the market with little market power, offered publishers a better deal than Amazon was offering. Apple pointed out to publishers some of the ways in which this deal was better.

To be sure, they weren't total fools about it, but there's at least a prima facia case here for collusion. Just enough of the conspiracy made it to the record.

It was certainly made clear that they couldn't do this deal one at a time. They needed to know the others were coming along. And, the record we have shows they were willing to make this clear in the occasional e-mail.

When negotiating with multiple parties, telling one party something like "The other guys agreed to this, you should too" does not constitute facilitating collusion between the parties you're negotiating with.

Not to mention that damning comment Jobs made that no one would be able to undercut the new, higher price. How is that possible in a free market? What holds up a price?

Jobs presumably anticipated that Apple's entry into the market would give publishers more leverage to negotiate agency model deals with other ebook retailers. Anticipating this — or even pointing it out to publishers — does not constitute facilitating collusion. Nothing in Apple's contracts with publishers required publishers to force Amazon onto the agency model — the MFN clause merely made it advantageous for them to do so, because if they didn't, and Amazon sold a particular book at the $9.99 price point, they'd have to let Apple sell at that price point as well (and keep 30%).

But, of course, it was advantageous for publishers to get Amazon to switch to the agency model even regardless of this.

And, you can bet that part of the settlement agreement was that some of Apple's former partners are going to testify about what didn't make it to the paper trail. You don't think the Government didn't find out the substance of some of those phone calls before filing?

Penguin's CEO already testified, and there was a notable absence of anything resembling unambiguous evidence of a conspiracy involving Apple. He basically just rehashed the argument that Apple's MFN clause made agency deals with Amazon more advantageous.

@ZnU: Drop it. Apple hasn't been found guilty, but the point of the conversation is that there is enough tantalizing clues to suggest they may be.

The court case will lay the evidence out. Right now you are tilting at windmills to defend Apple when there isn't enough evidence to defend nor convict.

I freely admit the DoJ could have evidence implicating Apple. I simply object to claims others have made that Apple is clearly guilty based on currently known facts.

And honestly, it seems somewhat unlikely that the DoJ has a smoking gun at this point. We can see the shape of their case, and it's basically an argument that Apple negotiating similar contracts (with particular terms) with multiple publishers is itself a form of collusion. The outcome at trial is likely going to depend on whether or not this argument flies, not on some surprise evidence of a more direct sort of collusion.

When negotiating with multiple parties, telling one party something like "The other guys agreed to this, you should too" does not constitute facilitating collusion between the parties you're negotiating with.

Actually, it does.

If you agree that the slideshow is factual here, you've agreed that collusion happened. The negotiations are supposed to be strictly bilateral. You aren't supposed to discuss what the others are agreeing to, especially when it is happening at the same time.

Geez, in your world, what would collusion consist of?

Moreover, it is clear that the collusion was needful. Plenty of references to "we all must jump off this cliff together". And yet here's ZnU, blandly noting that Apple is providing the needful information for them to do just that. But, somehow, "because Apple" I presume, it is magically not collusion.

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And honestly, it seems somewhat unlikely that the DoJ has a smoking gun at this point.

And yet, you blandly describe one yourself.

Look, everyone, including myself, understands that we're only hearing the DoJ side. But, what we are hearing is, if the case actually rolls out like this pretty damning.

In real life, cases go through a winnowing process. Some of this probably gets tossed because of good representation by Apple's Lawyers. Some of it will have a benign explanation.

But not "here's what your competitors are agreeing to". There's no reasonable benign construction on that, if proved. Doubly so when it enables everyone to raise prices at consumer's expense, which was a clear goal of all the participants.

No, actually, it doesn't. Apple is free to say, to anyone they bargain with, the terms of the deal are such and such. If you don't like it, don't sign it. And yes, as a point of law, if the signatories are then forced to go to other distributors and say we have to re-negotiate terms or we'll lose out on a deal with Apple, that's not collusion. The question, as I understand it, is not what terms are in the contract, but whether there was collusion to fix pricing and shaft the consumer.

Signing up another distributor under terms that make it feasible, or that even require you, to re-negotiate terms with other distributors, isn't collusion. It's business. Especially so if you can show that doing so actually lowered prices overall in the long term.

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But not "here's what your competitors are agreeing to". There's no reasonable benign construction on that, if proved.

But "here's the deal" isn't "here's what your competitors are agreeing to" is it?

If you agree that the slideshow is factual here, you've agreed that collusion happened. The negotiations are supposed to be strictly bilateral. You aren't supposed to discuss what the others are agreeing to, especially when it is happening at the same time.

There is absolutely no 'strictly bilateral' requirement anywhere. You're simply wrong about this. If I'm a distributor negotiating with several suppliers, and I have some terms I'm trying to achieve with each agreement, nothing bans me from telling one supplier what others have agreed to. For instance, if I want a clause in the deal saying the supplier has to buy me a ham sandwich, and supplier B doesn't want to agree to that, I can absolutely say "Well, this is a deal breaker for me. I've already got suppliers A, C, and D on board with this, and we'll just launch without you if you don't agree."

Following Apple's entry into the market, publishers renegotiated their deals with Amazon. If it could be shown that prior to that negotiation, publishers had explicitly agreed to all force certain terms on Amazon, that would clearly be collusion. If this agreement was facilitated by, say, Apple passing messages between publishers, or by publishers each agreeing with Apple that they would renegotiate terms with Amazon, each publisher having knowledge that other publishers had made such an agreement with Apple, then Apple would be implicated.

But as far as we've seen so far, Apple didn't pass such messages, and Apple did not reach an agreement with publishers that they'd renegotiate their terms with Amazon.

The DoJ is, so far, essentially just trying to spin "Apple negotiated agreements with publishers that would have required them to sell ebooks to Apple for less money than they'd have liked if they didn't renegotiate their agreements with Amazon" as "Apple facilitated collusion between publishers to force Amazon onto the agency model."